Oil has been quiet in recent days, with volatility down and the price rising steadily. A lot of this has been attested to the talks between Saudi Arabia and Russia in their pledge to freeze production increases. This could have given reluctant buyers the conviction to take speculative positions forcing up oil and oil related stocks. The stability of oil prices will have longer term effects on oil price directions as companies start to look at the reality of a lower price band and move their cap-ex towards projects that will align with the new reality of oil prices.
A good example of these shifts is the series of discussions in Canadian politics about the need for the oil industry to transport their goods to global buyers and not rely on transportation to the US and the sole selling point for oil. The oversupply in US oil has caused the majority of the pain in Canada because they couldn’t tap the global markets after the denial of the Keystone XL permit. Looking at companies that are making a shift in exploration and cap-ex to meet the new economic realities of the energy market will be good long term plays which, in hindsight, are priced very attractively.
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